Clearview National March 2019 - Issue 208 | Page 81

BUSINESSNEWS with an MTD for VAT interface. With the exception outlined in the next section, they can achieve this as follows: • Give detailed records of all sales and costs to their accountant or bookkeeper who keys them into an accounting system. This might mean little change for the business other than the cost. • Either implement a complicated accounting system or start using a system designed for installers. One of several possible suppliers is my company, Powered Now. Remember that manually adding up your sales and costs to produce the nine-box return does not comply with MTD for VAT. THE SPREADSHEET AND THE COPY AND PASTE GET OUT The temporary loosening of the rules that I referred to previously is that for 12 months only, HMRC will allow the sales and costs to be held in a spreadsheet. The spreadsheet can calculate the VAT return and the results can be copied and pasted into some “Bridging software” that will submit the VAT return through the HMRC VAT Portal. There are some good reasons for allowing this. Businesses consisting of multiple companies each with a VAT registration or partial exemption from VAT require difficult calculations not supported by any mainstream systems. Therefore, the final VAT return is done on a spreadsheet. However, that doesn’t apply to most installers. The exemption has been seized on by many accountants as a way to effectively get out of MTD for VAT. And over 50 software vendors have made their software able to accept copy and pasted VAT returns. We think that using this method is a mistake for most companies. In fact, we have looked at making our solution for MTD for VAT able to accept cut and pasted data. The work is trivial, but we have decided not to go down that route. I explain why in the next section. REASONS FOR NOT USING SPREADSHEETS AND COPY AND PASTE The first and most obvious reason for not using spreadsheets and copy and paste is that the solution will only be allowed for 12 months. So, if you use this approach you will need to learn about it and start using it. Then 12 months later you will have to learn a new method. So why not just make a single change? The second reason is that it will be more work. Entering lots of sales invoices into a spreadsheet plus copying and pasting totals is more work than using a system where the invoices can be produced automatically. Plus, re-entering data and copying and pasting makes errors more likely. For instance, when copying and pasting, simply failing to highlight the first digit of a number you are copying can lead to a major error in your VAT return with attendant fines etc. Then it should be considered that with MTD for Profit and Loss following not that long afterwards, it’s worth getting a system that will be able to handle that as well rather than have yet another change. The final reason is that in not implementing a full system you may well miss out on the benefits that you can get from that implementation. IS THIS BAD FOR INSTALLERS? From the start of April, every business reporting VAT on a quarterly basis will have to comply. Ignoring the deadline will lead to heavy fines. However, it should be noted that HMRC say they will make allowances provided companies have made a genuine attempt to implement MTD. Undoubtedly the initial impact of MTD for VAT and the follow up MTD for Profit and Loss will be more costs and disruption. Against this, installers should see benefits in the medium term as it is fundamentally easier and cheaper to run a business on a computer than from memory and bits of paper. There is an initial learning curve to climb, but after that the benefits should follow. THE GOOD NEWS Trade companies implementing systems can definitely get some large benefits particularly if they have some employees. The sort of benefits reported by my own customers include: • Much faster creation of quotes and invoices including while at customers’ premises. These can be to a professional standard. All calculations, covering totals, VAT on invoices and more are done automatically. • Sending documents by text or email all in one click is quicker and easier. It also gets a better customer response while being cheaper than stamps and paper. • The information is already on a system, allowing CIS and VAT returns to be done automatically. MTD for profit and loss will be able to be done in the future with no further input. • If all costs are on the system too, which is needed for the MTD for VAT return, it will be possible to see the profit on jobs with no further work. • With everything in one place, there’s no more hunting around for bits of paper everywhere. • All previous quotes and invoices can be easily viewed. ABOUT THE AUTHOR Benjamin Dyer is CEO and co-founder of Powered Now. Powered Now’s mobile apps aim to make it easier for installers, builders and other trades to run their businesses. www.powerednow.com C L E A RV I E W-U K . C O M » M AR 2019 » 81